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Forensic audit finds unclear tracking of Hurricane Michael insurance proceeds, $12.9M reported surplus
Summary
A forensic audit presented to the Gadsden County School Board reported roughly $26.97M in hurricane‑related revenue, $14.06M in related expenditures and a reported $12.9M surplus as of Feb. 18, 2025, while flagging weak documentation, limited board approvals and fund‑tracking issues.
A forensic review of Hurricane Michael insurance and FEMA‑related funds raised concerns about documentation and internal controls, though the audit also reported substantial revenue remaining.
Donna Melillo, senior account manager with Carr, Riggs & Ingram, presented the scope and findings of the audit covering April 2021 through June 30, 2024. The audit documented district hurricane‑related receipts of $26,965,262.59 (including $21,153,123.66 in insurance revenue and $5,812,138.93 in other hurricane revenue), recorded hurricane expenditures of $14,060,827.62, and an indicated surplus/deficit figure of $12,904,434.97 as of Feb. 18, 2025; interest earned through June 30, 2024, was listed as $677,629.19.
The report identified control weaknesses the auditors said complicated tracing and accountability: numerous transfers among district funds, lack of a board‑adopted budget or formal board policy governing use of insurance proceeds, limited shared finance file systems, reliance on external flash drives for records by a former staff member, significant finance personnel turnover, inconsistent use of purchase orders and incomplete documentation for some transfers and expenditures. The auditors noted some board approvals existed for specific items (temporary buildings, roof repairs and K–8 school design) but said overall records and approvals did not provide clear, consistent traceability of insurance and FEMA proceeds across funds.
Ms. Judith Mandela, GCCTA president, asked whether restrictions exist if hurricane payments were moved into general fund accounts; Mrs. Bruner replied that insurance payments are typically tied to specific damaged property and that FEMA project specifics can restrict use. Mr. Key described two SBA accounts the district uses for short‑term transfers and cash management; staff said transfers between the accounts had occurred as part of cash management practices.
The board heard the presentation and asked questions; members expressed appreciation for the audit information. The audit report and staff follow‑up items were presented for the Board’s consideration; the meeting record does not show additional formal board action at this meeting to change existing policies or to adopt a new board policy on use of insurance proceeds.
The Board will need to consider audit recommendations and whether to pursue formal policy or budget actions to clarify permissible use and tracking of hurricane‑related funds.
